Leverage the power of Fintech to shape your portfolio

Show us your technology! Throughout August, Inman will be talking to agents about the best technology they’re currently using – from their favorite CRM platforms to the hottest 3D tours and everything in between. Additionally, Inman Tech Reviewer Craig Rowe will be working overtime on additional product reviews on the latest and greatest technologies. And, at Inman Connect Las Vegas, we’ll be awarding the Inman Innovator Awards to the best of the best.

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Seasonality is a reality in the real estate industry, and your work schedule likely reflects this cyclical pattern. In reality, RAN data showed that 40% of an agent’s annual sales volume occurs during a four-month period (May, June, July, and August).

So what does this have to do with your personal finances? Well, a chain reaction of events is occurring that makes it essential that you make impactful financial decisions in the midst of your heaviest workload of the year.

Chain reaction

Since 40% of sales transactions occur during the summer months, 40% of your annual revenue is generated during this time. This forces you to decide how best to deploy that hard-earned commission income right in the middle of your busiest time of the year.

This is the biggest financial hurdle real estate agents face, and these are the two biggest pitfalls I see agents succumbing to:

  • The most common scenario: You spend so much time on your business, serving your customers at the highest level, that you simply neglect decision-making about your personal finances. You accumulate a mountain of cash in the bank, but you never use it.
  • Less common, but we see it: Same work ethic and business motivation as scenario #1, except instead of hoarding money in the bank, you end up spending based on whatever comes in.

Keep in mind that none of these scenarios are happening on purpose. Rather, they occur due to a lack of information available to help agents make informed decisions about how they will handle their hard-earned commission income.

This is where your ability to leverage fintech comes into play to provide you with the insights and tools you need to make real-time financial choices. Let’s dive into the fintech tools that will have the most impact on your ability to succeed in managing your finances.

The ability to view your net worth on demand

To make a tactical financial decision about deploying your commission income, you need to know where you are today. It’s not uncommon to have numerous financial relationships with banks, credit cards, mortgage companies, and investment companies, leaving your net worth scattered across a multitude of account connections.

The solution? Data aggregation software, which lets you link a read-only data feed to a central hub so you can see the balances of all your assets and liabilities in one place.

The result of data aggregation is a live net worth statement that can quickly show you the landscape of your financial life. With this information in hand, you can quickly determine whether you meet the benchmarks for various areas of your financial life and in which categories you should add. A good example of this is your emergency fund.

Say your target emergency fund is 12 months of living expenses held in cash, but you use a few banks for various checking accounts and a high-yield savings account to maximize your interest.

Data aggregation software will add up the total of all your cash accounts, allowing you to quickly decide if you are cash overweight in your net worth and would benefit from deploying the cash in other areas.

If data aggregation sounds like a tool you could benefit from, here are some of the more popular options:

Or, if you’re working with a financial advisor, they’ll have their own software that takes data aggregation one step further by allowing them to collaborate with you on your data. RightCapital is one of the leading providers of this technology.

The ability to manage your cash flow

The ideal strategy and corresponding technology tools for managing cash flow are highly dependent on your stage in your real estate career.

For the best producers

If you’re a top producer, I 100% believe you don’t need a budget, and here’s why: it takes way too much time, and your time is way too valuable. But here’s what you need: a overdue budget. As the name suggests, retroactive budgeting takes the traditional concept of budgeting (setting forward-looking spending limits for various categories in your life) and turns it on its head.

Instead of planning where your expenses occur, you plan where your investments occur, and you consistently do that first. As a result, where you spend becomes irrelevant because you know you’re already on track to meet your financial goals based on your investing habits.

Now, this is where fintech comes in for top producers: knowledge. Just because you don’t have to spend a certain way to make ends meet doesn’t mean your spending habits don’t impact the quality of your life. The more your spending habits match your values, the happier you will be in life.

Here are some examples:

  • You like to travel ? Spend the money to see the world.
  • Children are the top priority? Fully finance their tuition fees.
  • Is having an impact on your community a goal? Maximize your donations to the organizations you love.
  • Fortunately, the same technology that lets you view your net worth on demand will also aggregate your spending across all accounts (banks, credit cards, etc.).
  • With the breakdown of where all your money is going at your fingertips, you can direct your capital to what matters most in your life.
  • But without knowing where it’s going in the first place, your ability to fully fund the most valuable areas of your life will be a guess at best.

For new agents

If you are a new agent, first of all, congratulations! You are in for a very rewarding and potentially lucrative career. But getting into the real estate business is not for the faint of heart, especially when it comes to your personal finances.

For this reason, you should take the opposite approach to your budgeting as you grow your business, because every commission check should be maximized. Remember, a budget is forward-looking, which means you’re telling your money where to go as each commission check arrives.

There are a few great technology tools for the forward budgeting approach:

Both tools offer mobile apps that let you plan on the go, but know that you’ll get the effort out of these apps. They cannot be put on autopilot as retrospective budgeting allows. Using either app gives you the structure you need to be successful with your budget, but you need to take an active role in adjusting and monitoring to stay on track.

That said, with the right tools in hand and your determination to succeed, you are on your way to financial success. The opportunity to switch to the retrospective budgeting strategy will present itself as your business grows.

The ability to automate money movements

Now that you know exactly where you stand with your finances and how you manage your cash flow, it’s time to automate your money movements. While it’s not a flashy new technology, it’s vastly underutilized.

Systematic investment plans are an essential part of a retrospective budgeting strategy. They ensure that even though your attention is devoted to your business, your personal financial goals are still achieved in the background. Almost all financial institutions allow you to set up a recurring transaction to occur at the same time at various intervals.

Suppose the success of your financial plan requires you to invest $24,000 in your Solo 401(k) for the year. You can simply select the date of the month you want this transaction to occur, and $2,000 can be automatically invested in your retirement account each month.

This simple technology helps level the playing field between independent realtors and their corporate friends who receive this equivalent through payroll deductions in their company’s 401(k) plan.

Knowledge and systems

As you can see, fintech has come a long way from Excel spreadsheets that require manual entry of tracking every penny. Top producers can instead take advantage of the next generation of fintech to increase their knowledge of their own personal finances and automate busy work through systems.

Because earning a high GCI is not enough to create wealth; it’s how you deploy your GCI that determines your financial success. So while it’s ultimately up to the agent to act, don’t sleep on those financial apps that let you delegate the heavy lifting and spend more time focusing on getting your money’s worth. next trade.

Jordan Curnutt, CFP, is a Certified Financial Planning Professional for the most productive real estate professionals who want to strategically manage their wealth, optimize variable income, build balanced net worth, and mitigate what is likely their biggest expense. personal, taxes. Contact Jordan on Facebook, instagram and LinkedIn.